Former Icelandic prime minister Geir Haarde has been found not guilty of three counts of negligence over the 2008 financial crisis.

Mr Haarde was the first leader to be tried in court over the financial crisis, accused of not warning his cabinet or the wider economy about the trouble it faced.

Iceland's three main banks collapsed during the crisis.

Mr Haarde has described the charges as laughable and argued he was only doing what he thought was best for the country at the time.

He has been cleared of three charges but convicted on one count of not holding cabinet meetings when things turned critical.

However, that count carries no prison sentence and he will not be punished.

He faced up to two years in prison if found guilty of the more serious charges, including neglecting to deal with an overblown banking sector.

Mr Haarde showed no visible emotion as the 15-judge court issued its verdict.

About 70 people, including his family and political supporters, attended the session.

Moments later, Mr Haarde told reporters the judges had tried to appease a public angry at a political elite perceived as fostering an unsustainable banking system that grew to 10 times Iceland's GDP just before the meltdown.

"It is absurd," a furious-looking, red-faced Mr Haarde said.

"It is obvious that the majority of the judges have found themselves pressed to come up with a guilty verdict on one point, however minor, to save the neck of the parliamentarians who instigated this."

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Outside the court, a protester banged on a pot, in a repeat of the gesture that Icelanders carried out at the height of the crisis in the streets outside parliament.

The protests were the biggest ever seen in Iceland, occasionally turning violent in a nation renowned for its peaceful nature.

All of Iceland's top banks went under in 2008 just days after the collapse of Lehman Brothers, which led to a freeze on global interbank lending.

The country's crown currency nosedived and many Icelanders who had taken out foreign currency loans found themselves saddled with even bigger piles of debt.

Some Icelanders have viewed Mr Haarde's trial as scapegoating, while others have argued public accountability is essential.

"He was the captain on the bridge, but there were more ministers," pensioner Arni Einarsson said.

"The politicians thought that Iceland was like the Titanic - unsinkable."